THOMAS M. JORDE AND DAVID J. TEECE
The authors in this volume have demonstrated concern about technological innovation and competitiveness. Unfortunately, the linkage between these issues and antitrust is not well recognized by most antitrust scholars and courts. The reason for this, we contend, is not because scholars and courts consider such issues to be unimportant. Rather, it is because, as Oliver Williamson suggests (Chapter 7), the lens that is used to explore complex business practices--applied price theory--is highly limited. Baumol and Ordover suggest that contestability theory has a larger role to play in antitrust analysis; Williamson indicates how transaction cost approaches can complement the standard applied price theory. Jorde and Teece suggest that all approaches need to recognize the role of innovation in stimulating competition, and how the analytics could be different if innovation was incorporated into antitrust economics. A neo-Schumpeterian view of competition, which recognizes that competition is driven by innovation and takes place largely outside the price-output domain of standard microeconomics, would lead to concerns about certain mainstream views. Because all of this has not been fully worked through--the main efforts here being concentrated on the issues of market definition and on interfirm agreements in the context of innovation--one cannot accurately calibrate the social cost of an antitrust regime that proceeds with a highly stylized, static, and inaccurate view of the nature of competition.
The editors wish they could share the comfortable views of those who maintain that the current system is about right. We believe that the analytic lenses still commonly employed today in antitrust analysis were more suitable in a world where competition was less global, where innovation was less a multinational phenomenon, where time to market was less critical, and where the successes of the pioneers and the followers were clearly separated. Changes in the global economy mean that some of "modern" antitrust is anachronistic, at least in a setting of rapid technological change.
These concerns magnify the procedural issues addressed by Easterbrook. Generating more sophisticated rules of reason does not make life easier for judges, and especially for juries. However, "safe harbors," which provide de